Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fee Schedule To Modify the Liquidity Incentive Program

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104353; File No. SR-LTSE-2025-24]</DEPDOC> <SUBJECT>Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fee Schedule To Modify the Liquidity Incentive Program</SUBJECT> <DATES> <HD SOURCE="HED">December 9, 2025.</HD> Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> notice is hereby given that on November 26, 2025, Long-Term Stock Exchange, Inc. (“LTSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. <FTNT> <SU>1</SU> 15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU> 17 CFR 240.19b-4. </FTNT> </DATES> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend its Fee Schedule to modify the Liquidity Incentive Program (“LTSE LIP” or “Program”). The Exchange proposes to implement the changes to the fee schedule pursuant to this proposal on December 1, 2026. The text of the proposed rule change is available at the Exchange's website at <E T="03">https://longtermstockexchange.com/,</E> at the principal office of the Exchange, and at the Commission's Public Reference Room. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement on the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> On July 1, 2025, the Exchange implemented the LTSE LIP to enhance liquidity and improve market quality in LIP Enhanced Securities  <SU>3</SU> <FTREF/> traded on the Exchange by incentivizing Members to quote at or better than the National Best Bid and Offer (“NBBO”) and provide liquidity in both select securities, the LIP Enhanced Securities and more generally in all other securities traded on LTSE, the LIP Standard Securities. <E T="51">4 5</E> <FTREF/> On August 11, 2025, the LIP was subsequently amended to reduce the quoting threshold in a LIP Enhanced Security from 60% to 30% of the time at the NBBO of the Regular Market Session, <SU>6</SU> <FTREF/> in order to share in SIP Quote Revenue, <SU>7</SU> <FTREF/> which is distributed proportionally among eligible Members based on quoting activity. <SU>8</SU> <FTREF/> <FTNT> <SU>3</SU>  LIP Enhanced Securities means a list of securities designated as such, that are used for the purposes of qualifying for the incentives within the LIP. The universe of these securities will be determined by the Exchange and published on the Exchange's website. <E T="03">See</E> Definitions Section of the Fee Schedule. </FTNT> <FTNT> <SU>4</SU>  LIP Standard Securities means a security not defined as a ``LIP Enhanced Security'' and traded on LTSE. See Definitions Section of the Fee Schedule. <SU>5</SU>  See Securities Exchange Release No. 34-103517 (July 22,2025), 90 FR 35325 (July 25, 2025) (SR-LTSE-2025-16). The program includes three key incentives: (1) a proportional share of 80% of LTSE's SIP Quote Revenue for LIP Enhanced Securities, distributed among qualifying Members based on Quoting activity; (2) reduced taker fees for LIP Enhanced Securities, available to all Members without quoting obligations; and (3) for LIP Standard Securities, a choice between a proportional share of 20% of LTSE's SIP Quote Revenue or a quarterly credit, contingent on meeting specific quoting thresholds. </FTNT> <FTNT> <SU>6</SU> Regular Market Session or Regular Market Hours means the time between 9:30 a.m. and 4:00 p.m. Eastern Time. <E T="03">See</E> Exchange Rule 1.160(kk). </FTNT> <FTNT> <SU>7</SU> The Securities Information Processors (“SIPs”), which include the Unlisted Trading Privileges and Consolidated Tape Association, collect fees from subscribers for trade and quote tape data received from trading centers and reporting facilities, such as the Exchange (collectively, “SIP Participants”). After deducting the cost of operating each tape, the profits are allocated among the SIP Participants on a quarterly basis, according to a complex set of calculations that consider estimates of anticipated Market Data Revenue (“MDR”), adjustments to comport to actual MDR from previous quarters and a non-linear aggregation of total trading and quoting activity in Tape A, B and C securities in attributing MDR to each SIP Participant. Based on these calculations, the SIPs provide MDR payments to each SIP Participant during the second month of each quarter for trade and quote data from the previous calendar quarter, which are subject to adjustment through subsequent quarterly payments. These payments can be divided into six pools ( <E T="03">i.e.,</E> trade and quote activity in Tape A, B, and C securities). </FTNT> <FTNT> <SU>8</SU> <E T="03">See</E> Securities Exchange Release No. 34-103700 (August 13, 2025), 90 FR 40090 (August 18, 2025) (SR-LTSE-2025-18) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Liquidity Incentive Program). </FTNT> The Exchange now proposes several additional changes to the Fee Schedule to modify the LTSE LIP. The proposed amendments would (i) increase the revenue-sharing percentage for LIP Standard Securities under Incentive 3 from 20% to 50%; (ii) authorize the Exchange to change the MQS mid-quarter, with notice to Members; (iii) remove transitional language that applied to the initial roll-out of the Program and the third quarter of 2025; and (iv) make other clarifying edits to the language within LIP section of the Fee Schedule. Under the current Program, Incentive 3 provides Members quoting in LIP Standard Securities a proportional share of 20% of LTSE SIP Quote Revenue. The Exchange is now proposing a midquarter increase of that allocation to 50%, an increase designed to improve the competitiveness of the Program and further reward firms that maintain displayed quotes at the NBBO on LTSE, thereby improving consolidated market quality. The proposed increase more closely aligns the economic rewards distributed under the LTSE LIP with the value of displayed liquidity that Members contribute to the Exchange's market data revenue, fostering a fairer and more transparent incentive structure. The Exchange expects that increasing the revenue-sharing percentage will encourage Members to maintain high-quality, stable quotes throughout the trading day, improving displayed liquidity and contributing to the overall integrity of the market. This adjustment is the result of the Exchange's ongoing evaluation of the Program's effectiveness of increasing participation and quote quality. With this midquarter adjustment the Exchange is proposing to add a description to the LIP Notes section of the Fee Schedule to detail how the SIP Quote Revenue for Incentive 3 will be calculated for the fourth quarter of 2025 to account for the fact that the proportional share of the SIP Quote Revenue will not apply uniformly across the quarter. A Member that has qualified for Incentive #3 will share in 20% of the LTSE SIP Quote Revenue for that LIP Standard Security, distributed proportionally across all qualifying member firms within the calendar months of October and November. A Member that has qualified for Incentive #3 will share in 50% of the LTSE SIP Quote Revenue for that LIP Standard Security, distributed proportionally across all qualifying member firms within the calendar month of December. By allowing Members to receive increased revenue the Exchange seeks to encourage greater participation in LIP Standard Securities as soon as possible and provide the opportunity to share in SIP Quote Revenue, which is distributed proportionally among eligible Members based on quoting activity. The Exchange notes that it is not proposing any changes to the SIP Quote Revenue distribution, which will continue to occur at the end of each calendar quarter. The Exchange also proposes to reduce the MQS applicable to LIP Enhanced Securities to one round lot effective December 1, 2026. The Exchange established higher MQS levels, after the initial rollout of the Program, ranging from 200 to 700 shares, in an effort to encourage participants to display meaningful size at the NBBO. However, experience during the most recent quarters has shown such thresholds have created participation barriers for many potential quoting Members and limited the overall volume of quoting activity on the Exchange. By returning to one round lot MQS, the same level used at the Program's initial launch, the Exchange seeks to lower barriers to entry, attract additional quoting volume, and make LTSE LIP more accessible and practical for Members to implement within their existing market-making and risk systems. The Exchange believes that a lower MQS will promote broader participation, enhance competition among liquidity providers and contribute to tighter spreads ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 22k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━